CRTC hears complaints about 36-month cellphone contracts

Three-year contracts from cellphone companies should be banned, Canada's telecom regulator has been told in submissions to an online consultation.

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Hundreds of people submitted their opinions to the Canadian Radio-television and Telecommunications Commission about a proposed code of conduct for the country's wireless industry.

The overwhelming majority who wrote to the CRTC over the two-week online consultation period passionately voiced concerns about being "held hostage" by 36-month contracts.

"Get rid of the 36 months contract!!!," said one person on the CRTC's online forum. "It first started with 12 months, then 24 months, now the standard is 36 months, which is ridiculous!"

Another person wrote: "CRTC, please get rid of the 3 year contract. Canada will love you for this."

Those submitting opinions and suggestions to the forum were not required to post their names.

The first round of consultations, which closed this week, also heard several complaints about a lack of competition in the industry.

The regulator launched the online discussion to get the views of Canadians on what should be in a new code for wireless services, including cellphones and other personal mobile devices.

The CRTC said in October it would develop a national code so Canadians could have a better understanding of their rights as consumers, and so wireless companies would clearly know their responsibilities.

The commission is expected to issue a draft code by the end of next month, after which a second round of online consultations will be launched. Public hearings are also set to begin in February.

More than 500 people made submissions to the online forum, a small fraction of the 27.4 million wireless subscribers in Canada, which account for 78.2 per cent of households - an increase of six per cent from 2011.

The vast majority of wireless users have contracts with the big three carriers: Bell (TSX:BCE), Rogers (TSX:RCI.B) and Telus (TSX:T). Those three were at the centre of the most submissions about a lack of competition in Canada's wireless industry.

"Where is the competition? These plans are all the same," read one submission below a chart showing wireless plans being offered by the big three.

Consumers can opt for a smaller carrier but have so far appeared reluctant to move.

New entrants, such as WIND, Mobilicity, Public Mobile and Videotron, captured just four per cent of wireless subscribers and two per cent of overall revenues in 2011, according to the CRTC's latest communications monitoring report, issued in early September.

All of the major telecom companies and consumer advocacy groups have voiced support for the idea of national standards for wireless devices, but they have not agreed on how those rules should work.

Critics have argued that Canadian subscribers are simply paying too much for wireless services compared with other countries.

"Canadian consumers continue to be saddled with higher than average costs for wireless services as compared to other OECD countries," NDP consumer critic Glenn Thibeault wrote in his own submission to the CRTC.

Thibeault noted that the three-year terms offered in Canada lock consumers into contracts that often go far beyond the typical lifespan of a heavily used wireless device.

Consumers then end up paying up front for new cellphones, or being forced into extending their contracts by accepting subsidized "upgrades" to newer devices, rather than shelling out sometimes hundreds of dollars in cancellation fees.

The New Democrats are also calling for escalating fines for wireless companies that breach the new code of conduct.

"Under such an enforcement regime, the commission would be entitled to assess monetary penalties for non-compliance with the wireless code and any resulting regulations," said Thibeault.

Some provinces including Quebec have laws in place that limit cancellation fees and stop companies from automatically renewing cellphone contracts.